Congress enacted the Erdman Act of 1898 to promote the arbitration of disputes between interstate railroads and their employees and to prevent labor conflicts that might disrupt interstate transportation. Section 10 of that Act made it a federal misdemeanor for a carrier engaged in interstate commerce to discharge, or otherwise discriminate against, an employee because of the employee's membership in a labor organization. William Adair, a supervisory officer of the Louisville & Nashville Railroad Company, discharged a locomotive employee solely because of the employee's affiliation with a labor union (then commonly organized under fraternal bodies such as the Order of Locomotive Firemen). Federal authorities indicted and prosecuted Adair under Section 10. He was convicted in federal court and fined. On writ of error, Adair challenged the constitutionality of Section 10, arguing that Congress lacked Commerce Clause authority to regulate the private employment relation in this manner and that the statute violated the Fifth Amendment by depriving employer and employee alike of liberty and property without due process of law. The Supreme Court granted review.
Does Congress, consistent with the Commerce Clause and the Fifth Amendment's Due Process Clause, have authority to criminalize the discharge of an interstate railroad employee because of union membership under Section 10 of the Erdman Act?
Under the Fifth Amendment's Due Process Clause, the liberty of contract includes an employer's right to hire and discharge employees and an employee's reciprocal right to accept or decline employment on mutually agreed terms. Congress's Commerce Clause power does not extend to regulating matters that bear only an indirect or remote relation to interstate commerce, such as compelling employers to retain or not discriminate against employees based solely on union membership. A federal statute that interferes with these rights and does not directly regulate interstate commerce exceeds congressional authority and violates due process.
No. Section 10 of the Erdman Act is unconstitutional. It exceeds Congress's Commerce Clause power and violates the Fifth Amendment's protection of liberty of contract by forbidding railroad employers from discharging employees because of union membership. The conviction was reversed.
The Court, in an opinion by Justice Harlan, advanced two principal grounds. First, as a matter of due process, the statute impermissibly infringed the liberty of contract protected by the Fifth Amendment. The Court characterized the employment relation as a private matter of mutual agreement, within which an employer has a right to discharge, and an employee has a right to quit, for any reason not otherwise unlawful. By penalizing a discharge based solely on union membership, Section 10 compelled the employer to retain an employee against the employer's will and thereby curtailed the employer's freedom to contract on chosen terms. The Court treated this interference as a deprivation of liberty and property without due process of law. Second, the Court held that the statute could not be justified under the Commerce Clause. Although Congress possesses broad authority to regulate interstate commerce and activities directly connected to it, the majority reasoned that an employee's union membership status bears no direct relation to the movement of persons or goods across state lines. The law regulated the internal incidents of the employment relationship rather than the channels or instrumentalities of commerce themselves. The government's argument—that forbidding anti-union discharges would reduce strikes and thereby prevent disruptions to interstate commerce—was deemed too attenuated; the potential effect on commerce was indirect and remote, not a direct regulation of commerce within the meaning of the Constitution as then understood. Dissents argued the opposite on both points. Justice McKenna (joined by Justices White and Day) maintained that Congress could rationally regulate labor relations of interstate carriers to prevent strikes and safeguard the continuous flow of commerce; he also rejected the notion that the Due Process Clause bars reasonable, targeted labor protections. Justice Holmes separately dissented, contending that there is no absolute constitutional right to discharge for any reason, and that Congress may, within reasonable limits, adopt measures to prevent obstructions to commerce, including bans on discrimination based on union membership. The majority, however, adhered to a strict direct/indirect effects test under the Commerce Clause and a robust conception of liberty of contract under the Fifth Amendment, thereby invalidating Section 10.
Adair epitomizes the Lochner-era use of substantive due process to protect freedom of contract and imposes a narrow, direct-effects view of the Commerce Clause. It constrained federal efforts to protect collective labor activity for decades, pairing with Coppage v. Kansas (1915) and Hitchman Coal & Coke Co. v. Mitchell (1917) to entrench employer prerogatives such as the use of "yellow-dog" contracts. Although not formally overruled by name, Adair's doctrinal pillars were dismantled by West Coast Hotel v. Parrish (repudiating the liberty-of-contract approach to wage and hour laws) and NLRB v. Jones & Laughlin Steel (expanding Congress's commerce power to reach labor relations with substantial effects on interstate commerce). Statutorily, the Railway Labor Act (1926, as amended) and the National Labor Relations Act (1935) established enduring federal protections for collective bargaining, rendering Adair's holding a historical artifact rather than a current barrier to labor regulation.
Adair v. United States stands as a defining statement of early twentieth-century constitutionalism: it insulated private employment relations from federal regulation based on a stringent view of the Commerce Clause and a muscular conception of liberty of contract under the Fifth Amendment. In doing so, it thwarted an early congressional attempt to protect union activity in a sector vital to the national economy.